Growth for auckland airport
Auckland Airport is looking to increase its small share of the low-cost carrier market under a growth strategy unveiled to investors...
The strategy came after Chief Executive Simon Moutter said last December its focus in recent years had been very much on building infrastructure and capacity.
In the strategy outlined, the company said profitability had been fairly flat due to the cost drag of high capital spending in the aero division.
Other problems included passenger volume growth lagging global trends, the airport's retail offering being "off the pace" internationally, and slow property development activity.
In the first phase of its approach to the issues the company said it would reduce capacity-related capital spending in the aero division to a "bare minimum".
At the same time the company would invest carefully in opportunities for its retail and property divisions.
Resources would be applied to route retention, route development, tourism promotion and cargo propositions.
The second phase would see careful investment in the aero division when growth signals returned, and strong investment in retail and property division opportunities, the airport said.
It pointed out that cargo growth through the airport was "significantly" below potential, with anecdotal evidence pointing to current cargo practices and facilities stunting growth.
The company was looking to lift the performance of its retail operations, which contributed revenues of £52.5 million - or 38 per cent of the total - in 2008.
Investment in active management of retail operators could drive quality and sales, the company said.
The 363ha of land the airport had identified for development was a significant opportunity but also a large asset that did not generate cash.
It was looking at what it could do to maximise the long run average absorption of land at the airport location of about 10ha a year, but any significant shift was considered unlikely, it said.
The company is also to investigate "step-out" opportunities - business activities beyond the current confines of the airport's business and grounds.
Such investments were considered likely to be "modest", and unlikely to represent more than five per cent of total assets in the next three years.
Standard & Poor's Ratings Services left its A/A-1 corporate credit ratings and negative outlook on the airport company unchanged after the strategy was announced.
"The strategy is consistent with our expectations that the airport will reconfigure its forecast capital expenditure and concentrate on core activities to strengthen its financial profile," S&P said.
"Important to the rating outlook will be how the airport implements Monday's announced strategy, including its funding, its aggressiveness in the pursuit of growth opportunities, and the strategy's impact on the airport's financial metrics."
Source: www.nzherald.co.nz